Net Neutrality Regulation, The Trojan Horse

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After a good 24 hours of research and reviewing notes, here is my analysis on the Net Neutrality argument and subsequent FCC rulings passed last month.

Net Neutrality is an aspirational value; an abstract and subjective goal.

Many citizens that argue for “net neutrality” don’t even realize there’s ordinary people, not just politicans and big cable employees, that are against title 2 classification. This argument between “net neutrality” advocates who want greater government control over broadband companies and defenders of a bipartisan consensus around a “Hands Off the Internet” approach. Unfortunately, even many libertarians argue for the former rather than the latter. These people should want less government power and control, not more.

Government regulations have actually stifled new broadband deployment. Local municipal rules make ISP’s negotiate with different governments all the time to gain access to publicly owned “rights of way” to place wires above and below public and private property. Barriers to entry are primarily government created; streets that you need to put your fiber or cable under. The smart way to deal with it is put in an empty tube that anyone can rent space in to deploy. This can lower cost about 90% (while increasing road cost about 1%). Google fiber has done this.

Internet Speed Went Up

Kansas City, Missouri and Austin Texas were no accidental choices by Google. It was these states that streamlined video franchising laws so Google only had to get one license for the entire state. “[I]t’s clear that investment flows into areas that are less affected by regulation than areas that are dominated by it,” observed Milo Medin, Google’s Vice President of Access Services, in summarizing the lessons of Google’s Kansas City experience in Congressional testimony. (wired.com 2013-07-16)

There is limited competition in internet broadband in most areas, but it is not a full on monopoly that woulsd require heavy government hands to fix. Verizon FiOS and Google Fiber have forced competitors to up their speed. United States average internet speed went up from 6.0 to 11.6Mbps from 2013 to 2014 alone.

What those advocating for government control fear is censorship. I would argue that this is actually a very unlikely scenario even under toady’s limited competition. Some may falsely assume the FCC was already regulating net neutrality; which it actually was not until December 2010 when it passed rules that were immediately brought to court by Verizon and the rules were overturned by early 2014. With the new rules implemented as of February 26, 2015, the FCC has decided to reclassify broadband internet access service as a public utility after roughly two decades of amazing innovation and investment without such application.

Fighting FCC Regulations

Now if you ask the advocates for any example of the light censorship discrimination, these so-called “fast-lanes” they may try to give you the example of the Netflix slowdown of early 2014. In reality, the actual slowdown of Netflix traffic usually blamed on Comcast could also be attributed to internet backbone provider Cogent who set a special prioritation in 2014 or just Netflix itself for trying to save money in transfer costs but also invariably forcing its traffic through clogged delivery routes when less congest channels were avilable. Eventually Netflix joined into a contract with Comcast to pay a higher price to directly send data to Comcast. So in reality, for all the people acting like we have all kinds of blocking or throttling of content by ISP’s, and thus society needs these government mandated net neutrality rules, we don’t have a single real example of such activity, that I could find.

If a fast lane existed for paying content providers; you may not even notice slower traffic from web pages, but actually overall it may be even faster because if fast lanes existed, all data intensive traffic would be routed away from the general data-path thus improving the speed of the slower, non-premium paid lanes of traffic. If an ISP can’t make a fast and slow-lane they would have to charge more for everyone. With the option of fast lanes, they would just charge big content providers (like Netflix who already brokered these agreements and improved their service). This could be a big reason Netflix pushed for Net Neutrality with their campaign and letter directly to the FCC.

Title 2 classification gives the FCC the most power. This classification was introduced in the in the Communications Act of 1934 to deal with the lack of competition in the phone network (AT&T’s natural monopoly). The 2015 FCC ruling reverses some of the 1996 Telecommunications Act. This mid-90’s legislation actually reverse some Title 2 standards that paved the way for more competition. The act created separate regulatory regimes for carriers providing voice telephone service and providers of cable television, and a third for information services which the internet was classified as. In 2000 the phone pricing rules were actually struck down in a court battle. But the effects of the act made the number of U.S> ISP’s shrink by 74% in less than a decade.

Not only is more government intervention detriminetal to competition, every man hour spent fighting FCC regulations by telecoms in court takes away manhours that could be used to upgrade infrastructure and improve service to consumers. Not only this; but taxpayers feel the burden of their money going down the drain for these causes.

Packet prioritization makes sense in bandwidth sensitive video or audio streams. Imagine having a buffering break in a voice conversation (let alone during your House of Cards Season 3 binge).

Treating broadband like a public utility is not good for innovation. Utilities like electricity and water have been treated much differently. What’s the difference between water and the Internet? Internet gets faster, cheaper, and more innovative over time, while water…pretty much stays the same. Water, electricity and other utility providers charge a lot for standardized products. They’re slow to innovate because they’re monopolies, and regulation protects them from competition. Broadband providers are constantly pushing the boundaries of technology to keep pace with exploding demand. If you regulate broadband like you regulate water, competition will evaporate. Speaking of evaporating, imagine if water utilities had worked out how to get water from air, like Skywater or EcoloBlue, if we’d still have the same drought crisis in the West as we do now. What incentive did they have to innovate new water technology? Maybe they don’t have an incentive for the people’s best interests, or they’re just drinking too much of the fluoridated water that dumbs them down.

For more arguments against FCC internet regulation of net neutrality, visit DontBreakThe.Net. Perhaps I’ll even update you guys in the coming months; as I have not even read the FCC rules decision; though I hear it’s 400 pages. They’re mostly aimed at regulating the last mile of service but the FCC is looking at the interconnections (that apparently caused Netflix to slowdown last year).

Now although regulation may be bad; overall I think the internet innovation will survive with this level of control, but watchout for further regulations on internet.